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Lifestyle Platform- Category demonstrates the O2O phenomenon

Lifestyle Platform: Category demonstrates the O2O phenomenon

Chinese brands deliver extreme convenience

Added to the BrandZ™ China Top 100 for the first time this year, the lifestyle platform category does not appear in any of the other BrandZ™ country reports or in the BrandZ™ global report. It describes a uniquely Chinese phenomenon—the radical integration of online platforms and offline capabilities (O2O) to provide products and services with extreme consumer convenience.

Although consumer desire for convenience is fairly universal, China is furthest evolved. Only in China do hundreds of millions of people, especially in major urban centers, conduct their daily lives, generally without cash, using only one or two apps to order and pay for almost any product or service they need. Delivery is just about instantaneous.

The three brands ranked in the lifestyle platform category—Meituan, Ele.me, and Dianping—illustrate this phenomenon. Meituan and Dianping are owned by the same corporate parent, Meituan Dianping, which enjoyed a successful IPO in September 2018. Tencent is a major investor. Meituan began as a group buying site (like Groupon) and Diaping was peer review site (like Yelp). The two brands merged in 2015.

Today, Meituan is China’s largest online booking site for services. People use the Meituan app for reserving a restaurant, renting a bike, buying movie tickets, ordering food for delivery, or making travel arrangements. Meituan facilitates China’s O2O lifestyle, linking online purchasing with offline delivery. Meituan sometimes refers to itself as the “Amazon of Services.”

Ele.com is a food delivery platform owned (since April 2018) by Alibaba. The two rivals, Alibaba and Tencent, compete in food delivery with Ele.com and Meituan, respectively. To compete more effectively, Alibaba merged Ele.com with Koubei, another Alibaba brand that began in food delivery but expanded its portfolio O2O services.

These moves are part of a fierce battle for dominance of O2O in China. When Meituan added ride-hailing to its services, it went up against Didi Chuxing, the leading ride-railing brand and a newcomer in the BrandZ™ China Top 100. In response, Didi added food delivery, a core Meituan service. This competition is producing some deep price promotion, making consumers the only clear winner, at least for now.

China was able to rapidly leapfrog to this cashless, extreme convenience because of a confluence of conditions that is specific to China. These include: abundant data and advanced artificial intelligence capabilities coupled with relative relaxed privacy restrictions; minimal existing use of credit cards; wide mobile penetration; a low-wage labor force required for rapid delivery; and an enormous rising middle class willing to spend money.

Ultimately, the lifestyle platform category aligns with the government’s key agenda to improve peoples’ lives, and the category benefits from many government core initiatives, such as the development of a digital economy and the improvement infrastructure necessary to interconnect cities of all sizes throughout the country.